Insurance Reimbursements After an Accident

Where’d the Money Go?

It seems more and more people are involved in motor vehicle collisions and find out that the Doctor, the Hospital, the Ambulance Company and other lien holders, all have their hand out for any settlement check or judgment you may recover from the person or their insurance company who was responsible.  What you say, the money is not mine? Nope, it is not.

Using a hypothetical client, let’s say the client was severely injured in a motor vehicle collision.  There have been over $100,000 in medical bills so far and it is not over.  The client learns that the defendant had minimum insurance of $15,000.  Since the person had borrowed the car, the owner had $50,000.00 in insurance.  You can see there is a major gap between the insurance and the bills.

Since the bills were paid by Medicare, the government gets first claim to the money.  Also since the providers took Medicare payments, the providers cannot  do what is called balance billing:  they cannot seek the difference between what was paid by insurance and what was the amount of the bill. This is not from the injured person but from the defendant.  But as you can see, if Medicare paid $100,000, there is not going to be any money for the client without some heavy duty lawyering.

There are several ways the Medicare claim gets compromised. There are cases that say in a case of this nature, the Medicare folks need to compromise. Unfortunately there is no formula and each case has to be negotiated on its own.

If the same event was true but the bills were paid by a non-government insurance, say Health Net or United Health, then each care provider, if they filed the proper lien, has a claim against the defendant’s insurance payment.  So in the above example the hospital which may have been paid only one third of its bill, will seek the rest from what the client thinks is his or hers.  Several arguments can be made to reduce that claim the first being the common fund, arguing about the true value of the service and whether the lien was recorded timely.

In a private insurance claim, the providers are not entitled to a claim against under insurance coverage.  If we take the above example but add that the client had $250,000 in under insurance coverage through his or her own policy, that would not be accessible to the providers.  Uninsured and Underinsured coverage is usually very inexpensive and should be discussed with your agent.

Unfortunately, the government has passed laws that allow the government to get to the underinsured coverage.  So if it was a Medicare, VA or TRICARE claim, all money available from either the defendant or from the client’s own coverage, is subject to a lien.  This government lien is different from the state lien and attaches automatically.

So, if you are in a collision and some adjuster offers you quick cash to settle, be aware you may have to turn it over to others and never see a dime.

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